USD/CAD Moves Higher Amid Expectations for Fed to Tighten Monetary Policy 

Key Insights

• Gold and silver prices moved lower despite rising inflation. 
• The ten-year yield hit its highest level since 2018 on a hawkish Fed tone.
• Oil prices tumbled in choppy trading despite the supply shortage.

USD/CAD rallies as a firmer dollar and rising yields underpin a bullish uptrend. holds steady as The ten-year yield hit its highest level since 2018 near 2.93% today. Rising inflation has caused investors to sell bonds, buoying yields.

Gold prices moved lower as the dollar and benchmark yields strengthened. Investors await Fed rate hikes to rein in spiraling inflation. Oil prices moved lower in volatile trading as the IMF increases concerns over inflation and reduced economic growth expectations.

In March, housing starts unexpectedly increased by 0.3% to a seasonally adjusted annual rate of 1.793 million units. Building permits rose 0.4% to an annual rate of 1.873 units last month.

Rising mortgage rates and supply chain disruptions for housing materials are creating challenges for first-time homebuyers. However, the shortage of housing will continue to underpin housing starts this year.

Technical Analysis

The USD/CAD extended gains and will continue in an upward trend in the short term. In the long term, elevated commodity prices will underpin the Loonie. Resistance is seen near the 50-day moving average of 1.265. Support is seen near the 10-day moving average of 1.26. 

Short-term momentum turned positive as the fast stochastic had a crossover buy signal. Medium-term momentum is positive as the MACD line generated a crossover buy signal.

This scenario happens when the MACD line (the 12-day moving average minus the 26-day moving average) crosses the MACD signal line (the 9-day MA of the MACD line).